Title: NATIONAL INSURANCE CO. LTD. v. RAVI PRAKASH MISHRA & ANR.
Summary
The Delhi High Court has ruled that an insurance company is obliged to fulfill its contractual obligations when it agrees to provide compensation for the death or injury of the insured vehicle proprietor. The court stated that the insurance company is not generally liable for compensating the proprietor, borrower, or driver of the insured vehicle for bodily injury or death under Section 163A or Section 166 of the Motor Vehicles Act, 1988. However, the insurance company is responsible for meeting any contractual liability to pay compensation in the event of the death or bodily injury of the owner, borrower, or driver of the insured vehicle, provided the vehicle is covered under the “Comprehensive Policy.” The claimant, who was involved in an accident while operating a motorcycle for office purposes, argued that the insurer was responsible for compensating the driver of the vehicle if the owner of the vehicle had duly paid the insurance premium for the policy. The court ordered that the Impugned Award be modified to the limited extent that the appellant shall pay the respondent no. 1 an amount of Rs. 1 lakh along with interest at the rate of 9% per annum from the date of filing the Claim petition.
About the case
The Delhi High Court has determined that an insurance company is obliged to fulfill its contractual obligations when it agrees to provide compensation for the death or injury of the insured vehicle proprietor.
According to Justice Navin Chawla, the Insurance Company is not generally liable for compensating the proprietor, borrower, or driver of the insured vehicle for bodily injury or death under Section 163A or Section 166 of the Motor Vehicles Act, 1988.
Nevertheless, the court also stated that the insurance company is responsible for meeting any contractual liability to pay compensation in the event of the death or bodily injury of the owner, borrower, or driver of the insured vehicle, provided that the vehicle is covered under the “Comprehensive Policy.”
The observation was made by Justice Chawla in response to an appeal filed by National Insurance Company Limited, which challenged an award rendered by the Motor Accident Claims Tribunal in favor of the claimant.
In 2006, the claimant was involved in an accident while operating a motorcycle for office purposes. He collided with a divider as a result of the thick fog and reduced visibility. He sustained a facial deformity, jaw loss, and the loss of both of his eyes in the aforementioned tragedy. The hospital’s Disability Certificate indicated that the claimant sustained a 100% permanent disability.
The insurance company also argued that the driver was in actual possession and control of the insured or borrowed vehicle in the capacity of the owner when he was specifically employed for the purpose of driving it, and therefore cannot be considered a third party.
Conversely, the claimant maintained that the insurer was responsible for compensating the driver of the vehicle if the owner of the vehicle had duly paid the insurance premium for the policy. This was true even if the vehicle was borrowed by an employee or was being operated by the employee. In this instance, the liability was only insured for Rs. 1 lakh under the insurance policy.
The insurance company argued that the claimant was operating the motorcycle, which was owned by the company with which he was employed, and, as a result, had assumed the role of the proprietor. Additionally, it was argued that the claimant was not a “third party,” and as a result, the insurance company was not obligated to provide compensation under the “Act Policy.”
Justice Chawla stated that the insurance policy is not required to cover the liability for death or bodily injury resulting from the employment of a person insured, except for a liability that arises under the Workmen’s Compensation Act, 1923, in the case of an employee who is engaged in operating the vehicle. This information was obtained by examining Section 147(1) of the Motor Vehicles Act, 1988.
“In this instance, the respondent no. 2 was operating the motorcycle as an employee of its owner.” The “Act Policy” would exclusively cover the liability that arises under the Workmen’s Compensation Act of 1923. Consequently, the appellant was not obligated to provide compensation for the injuries sustained by respondent no. 1 beyond the liability arising under the Workmen’s Compensation Act, unless the contractual liability under the insurance policy was satisfied, the court stated.
It was further stated that the insurance company was only obligated to provide compensation to the claimant up to Rs. 1 lakh.
The court ordered that the Impugned Award be modified to the limited extent that the appellant shall pay the respondent no. 1 an amount of Rs. 1 lakh along with interest at the rate of 9% per annum from the date of filing the Claim petition, which is 15.03.2010, until the date of deposit of the compensation by the appellant with the learned Tribunal in compliance with the order dated 03.07.2018 of this Court.
In 2018, the insurance company was directed to deposit the entire awarded amount, along with the interest that had accrued, with the Tribunal by means of an interim order.
The court ruled that the compensation amount awarded in accordance with the final judgment, as well as the interest accrued, will be released to the claimant from the deposited amount, while the insurance company will receive the excess amount and the interest accrued.
The insurance company was represented by Sanjay Rawat. The claimant was represented by advocate Gaurav Gupta.
